Foreign Minister Tzipi Livni told a Palestinian newspaper in an interview published Thursday that Israel could not accept a 2002 Arab League peace initiative in its current formulation.

Livni said that the issue of borders must be resolved through negotiations, not be determined in advance, and pointed out that the proposal for Palestinian refugees contained within the peace plan was unacceptable to Israel.

In her first interview to the Palestinian media, Livni also told Al-Ayyam that Israel's stance on the new Palestinian unity government would be determined by on its diplomatic plan. She also said the Israeli stance would depend on the extent to which the new government meets the three demands of the Quartet.

The team of international peace brokers - the United States, United Nations, Russia and the European Union - has demanded that the PA government recognize Israel, renounce violence and abide by previously signed peace agreements in order to lift the sanctions imposed in the wake of the 2006 Hamas election victory.

"We are demanding that the government meet these three conditions," Livni stressed.

The Arab initiative, drafted at a March 2002 meeting of the Arab League in Beirut, calls for the full normalization of ties between Israel and the Arab world in return for a complete Israeli withdrawal from all lands captured in the 1967 Six-Day War.

Olmert, Abbas to meet to 'further the dialogue'

Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas will meet in two weeks, their third meeting since the resumption of top-level diplomatic contacts.

They will concentrate on ways of "furthering the dialogue" in view of the difficulties in forging a Palestinian unity government, a senior political source in Jerusalem said on Wednesday.

Earlier this week, aides for the two leaders met for a frank discussion to prepare for the Olmert-Abbas meeting.

In Cairo on Tuesday, Abbas said he would meet Olmert in "a week or two."

Olmert reiterated on Wednesday during his meeting with the visiting European Union commissioner for foreign affairs, Benita Ferrero-Waldner, the preconditions for proceeding further with diplomatic talks with the Palestinians.

"My talks with the Palestinian president will deal with issues relating to containing terrorism and the quality of life of the Palestinians," he said.

Olmert is unwilling to discuss the issue of a final settlement or the implementation of the second stage of the road map.

As an example of the improvements in the quality of life of the Palestinians, Olmert told the visiting EU official of his decision last week to extend the daily operating hours for the Karni crossing for goods in and out of the Gaza Strip.

"This way the crossing can handle more than 800 trucks per day," he said.

Ferrero-Waldner said Wednesday that there is no discord within the Quartet on its demands of the Palestinian unity government, despite recent signs of divisions.

The new power-sharing deal between the rival Fatah and Hamas movements, reached in Saudi Arabia earlier this month, only pledges to respect past peace deals, falling short of the international conditions.

Abbas says the deal is the best he can get from Hamas.

While the U.S. and EU have reacted with skepticism, Russia has been more positive about the power-sharing deal.

Ferrero-Waldner, who met with Palestinian officials on Wednesday, said the new government needs to respond to the Quartet principles.

However, in talks with Palestinian and Israeli officials, Ferrero-Waldner has made clear the EU is not likely to pull the plug on an emergency aid program that provides relief for some 900,000 Palestinians.

"We have never abandoned the Palestinian people," said Ferrero-Waldner. She made clear the EU would not do so in the foreseeable future.

Ferrero described continued assistance to the Palestinians as a way to keep the situation somewhat under control. She said the EU was keen to engage the Palestinians by launching good governance and other programs.

Meanwhile, U.S. Secretary of State Condoleeza Rice is due to visit the region in late March to try to expand the "political horizon" and help shape a future Palestinian state. It is not expected that she will hold a tripartite meeting with Olmert and Abbas.

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